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Study Shows Psychological Impact of Unemployment

For the nearly 15 million Americans currently unemployed, this year's Labor Day holiday may be less a celebration of a brief respite from work and more a cruel reminder that, despite glimmers of hope in the U.S. economy, there remains scant opportunity for many to rejoin the workforce. Very few people don't know someone—a friend, relative, or former colleague—who has lost a job amid the recession: The economy has shed some 6.7 million jobs since December 2007, according to the U.S. Bureau of Labor Statistics (BLS), and some experts fret the U.S. could be in store for a "jobless recovery" in 2010.

Against a backdrop of vanishing paychecks and dwindling savings, despair and depression are rampant, according to a study released on Sept. 3 by the John J. Heldrich Center for Workforce Development at Rutgers, the State University of New Jersey. The study, The Anguish of Unemployment, is one of the first and most comprehensive of its kind, according to its authors, who say they sought to produce a representative view of unemployed workers' attitudes. The report was conducted through surveys of 1,200 people who are currently unemployed or have been in the past 12 months. The BLS reported last month that the number of people who had been unemployed for 27 weeks or longer rose by 584,000 in July to 5 million, the highest level since 1948 when the data were first collected.

Overwhelming majorities of the survey's respondents said they feel or have experienced anxiety, helplessness, depression, and stress after being without a job. Many said they've experienced sleeping problems and strained relationships and have avoided social situations as a result of their job loss. Still others described diminished hopes of finding employment at older ages, and feelings that advanced degrees are useless or have caused potential employers to think they're overqualified. Some said they have questioned their self-identity after they had allowed their professional careers to define them, and some reported difficulty finding credit to begin new businesses.

Blaming Themselves "We don't tend to look at unemployment as having a psychological effect, just an economic one," co-author Carl Van Horn, a Rutgers professor of public policy, said on Sept. 2 in an interview. Van Horn warns of a silent mental health epidemic, as the jobless face financial, emotional, and social consequences of being unemployed. "For many people, being unemployed is embarrassing. They're not interested in talking about it and think of it as their fault," he says. "As a researcher for 35 years, I'm struck by the breadth and depth of the psychological impacts."

Analyst expectations for August unemployment figures, which the federal government will release on Sept. 4, are slightly more optimistic than the July data. Bloomberg's latest survey of economists projects that the economy lost 230,000 jobs, while market analysis firm Action Economics estimates a drop of 200,000 jobs. That compares with July's nonfarm payroll decline of 247,000 jobs, figures that helped the unemployment rate decline slightly to 9.4% from the previous 9.5%—albeit in part due to discouraged workers dropping out of the labor force. Government officials continue to warn that the jobless rate could hit 10% in coming months.

The randomly selected sample of 1,200 Americans, of which almost 900 were unemployed when the study was conducted in the beginning of August, included people of all ages, races, professions, and income levels. Most of the surveyed workers had lost a permanent position, with only 27% having had a temporary position. The sample was pulled from a 40,000-person database of Knowledge Networks, a survey research company, whose profiles mirrored the Labor Dept.'s definition of the unemployed as those in the workforce seeking employment. The study also includes people without landline telephones and Internet access.

The survey found that 60% of the respondents received no advance warning of their layoff, and 84% received no severance package or other compensation. Just under half, 43%, of those unemployed reported having received unemployment benefits in the past year, which broadly reflects the national average, while 61% described themselves as "very concerned" their benefits would expire before they found a job.

Dipping into Savings It was the first stint of unemployment for a slim majority (51%) of those surveyed. About half (51%) said the government should be mainly responsible for helping to provide for workers who have been laid off, while one-third thought workers themselves should handle that responsibility. Nearly all of those still unemployed reported that they had cut their spending, while more than half had resorted to dipping into savings or retirement accounts, or borrowing from friends or family. One-quarter said they had missed a mortgage or rent payment because of their unemployment.

Despite the desperation, many of the jobless said they remain committed to attending job fairs, scouring job boards, or visiting career centers for help. "The expression of resolution and perseverance on the part of these folks gives the sense that these folks have not given up," Van Horn said. "But they're living with anxiety," not knowing when they may land a job.

Van Horn says the survey's results signify the current downturn's impact will be felt long after the economy rebounds and more Americans find work. "Just as the Great Depression had a big effect, this is a major life-changing experience for people," he says. "It's not like getting over a cold—it's like recovering from serious illness." Long-term unemployment may lead to higher divorce rates, Van Horn speculates, and could also persuade Americans to take fewer financial risks.

The American notion of success is often based solely upon the capability of individuals, says Ellie Wegener, director and founder of the Employment Support Center, a Washington-based nonprofit that leads support groups for the unemployed. "It's the backfire of individualism, which this country is great at," she says. "Here your success or your failure depends on you, so when people lose their job, they think it's because they are a failure. They need to regain their self-esteem, or they'll never get a job."

Deprez is a reporter for Bloomberg News in New York. Follow her on Twitter @esmedeprez.